Consumers picked up more than £240 million in compensation for failed investments and poor financial advice last year, says the Financial Services Compensation Scheme (FSCS).
Around 34,000 consumers lost money due to failed investments or collapsed financial firms, according to the FSCS annual report.
Since 2001, 4.5 million consumers have been paid billions of pounds in compensation by the scheme.
“The scheme is there as a safeguard for consumers when financial firms go to the wall,” said chief executive Mark Neale.
“The figures are just an indication of the personal stress and hardship consumers experience as a result of bad advice or firms going bust. We’re here to help and the service is free.”
Free financial claims advice
Neale also warned consumers against accessing the service through a claims management firm.
“They are convincing but do nothing consumers cannot easily do on their own but grab up to 25% of the compensation they recover on their behalf.”
The FSCS is funded from a levy on financial firms regulated by the Financial Conduct Authority (FCA) and money recovered if financial firms go into liquidation.
“Our main job is to make sure money paid out by consumers is protected,” said Neale. “To improve this, we are upgrading our online services so they can track claims.”
The FSCS scheme covers up to £50,000 of investments with a single company or £85,000 of savings on deposit with a bank or building society.
The scheme only covers regulated investments and financial companies.
In addition to assisting with consumers with claims, last year the FSCS helped more than 200,000 people with inquiries about protecting their investments and savings.
Warnings about bogus advisers
Dealing with an unregulated firm
If you buy shares, save money or invest with an unregulated firm, you lose any protection offered by the Financial Ombudsman and the Financial Services Compensation Scheme. Broadly, you have no independent place to complain if the deal goes wrong and are unlikely to win any compensation.
Checking if a firm is regulated
Go to the Financial Services Register to check if a firm is regulated in the UK.
Reporting a suspected bogus adviser